Sensex crashes over 600 points on tax proposals; recovers later

Mumbai: In a sharp knee-jerk reaction to various tax proposals made by Finance Minister Arun Jaitley in his Budget 2016-17, the stock market benchmark Sensex crashed 660 points but recovered back to the positive territory on heavy buying by domestic institutions.

Reports about an imminent rate cut by RBI also helped improve the sentiment battered by the proposal for higher dividend distribution tax on those earning more and a proposal to increase Securities Transaction Tax in some categories.

The NSE Nifty also sank below the 6,900-mark during the Budget presentation, before recouping the losses. In a trading marked by spells of volatility, the Sensex crashed to 22,494.61, a loss of 659.69 points, or 2.84 percent.

The 50-share NSE Nifty dropped 203.95 points, or 2.90 percent, to 6,825.80. All sectoral indices were weighed down by widespread selling, with FMCG, consumer durables, IT and banking sectors falling by up to 3.02 percent.

Banking stocks led by State Bank of India lost ground after the finance minister proposed a lower-than-expected Rs 25,000 crore to be provided for recapitalisation of public sector banks.